In light of all the attention digital transformation and associated technologies is getting these days, one can be forgiven for thinking their company is hopelessly lagging behind the times.
Well, don't feel so bad -- on the ground, across all those small to mid-sized business that don't subscribe to high-priced analyst services, technology is only beginning to make inroads. You know, the local machine shops, warehousing services, landscaping companies and the like. A recently published analysis of US Census Bureau data, based on 583,000 US businesses at the end of 2018, finds only about one in 10 are actually using sufficiently advanced technologies such as touchscreens or machine learning. The most advanced industry is manufacturing, in which 15% have adopted some combination of advanced IT.
The challenge for technology advocates, then, is convincing the business that it needs to invest more in these technologies. Not just for the feel-good abstract terms such as agility and fluidity and everything else promised by the high-flying analyst and consulting firms, but real-life, tangible business improvement.
We can conclude that the journey to digital transformation is going to be a long one. A new paper published by the Industrial Internet Consortium (affiliated with the Object Management Group) provides some clues to the alignment of technologies and strategies that will propel companies forward in this journey, based on the following steps:
- Find out what the leaders in your industry are doing.
- Investigate developments in comparable industries.
- Identify your key use cases.
- Deduce which digital transformation technologies are most relevant to you.
- Identify key vendors.
- Plan for deployment.
Of course, there's a lot going on underneath of these six basic steps. Bringing digital services to consumers is one side of the coin. The other side, however, comes from within -- bringing together information technology (IT) and operational technology (OT). This entails "the innovative use of sensor-driven data and data-driven actuators affect people, business, operation, and the physical environment and empower the creation of better business outcomes," the IIC paper's authors explain. Technology proponents, then, need to elevate their roles to advisors on designing new business models. "This includes new value propositions made possible by accumulating successes in innovation and by reducing the conflicts between these new and incumbent processes, and other parts of management systems. This is done by changing the designs of management systems."
The IIC authors point to essential elements in a digital transformation process:
- Trustworthiness: Security, safety, reliability, resilience and privacy need to be key components of digital transformation. "Trustworthiness of IoT-enabled systems is the degree of confidence that an IoT system will perform as expected with characteristics including safety, security, privacy, reliability and resilience in the face of environmental disturbances, human errors, system faults and attacks."
- Readiness to innovate: An enterprise "needs to set up innovation processes that are different from existing processes in several ways, including exploring feasibility of applying new technologies, integrating IT and OT and the creation and operation of solutions that combine OT and IT."
- Openness in processes and systems. In addition, the report's authors point out, innovation needs to be an open process "dealing with the complexity of integrating OT and IT, enabled by cooperation among different divisions and different firms -- including IT and OT organizations. The process should enable open interaction with partners, customers and suppliers in IT and OT domains."
- Extended interactions with customers. While internal transformation is key here, customers should always be the beneficiaries. The transformation needs to incorporate "optimized processes for creating solutions for customers, delivering better customer experiences and/or outcomes, leveraging connected things and people including customers."
- Greater collaboration -- and convergence between IT and OT teams. As things progress, "the IT and OT organizations learn each other's domain knowledge and understand each other's constraints, problems and discover collaboration issues for solving the problems." The report's authors caution that such innovation is likely to be "vulnerable to resistance from both OT and IT organizations and are likely to conflict with incumbent processes and organizational structures and other aspects of existing management systems."
Digital transformation efforts "must have a well-defined objective, charter, mission, and governance structure," the IIC report adds. "The program must also be guided by a cross-functional team with a clear leader and a corporate sponsor, with active participation from several cross-functional stakeholders who must work together in a structured way to achieve the better outcomes."